Supplemental Insurance for Medicare: What It Is and Why You Need It

In 2017, 58 million people are enrolled in the Medicare program. That is about 18% of the U.S population. However, one of the most telling statistics is that more than 90% of Medicare subscribers have supplemental insurance. That means about 1 in 10 people don’t have supplemental insurance. Are you one of them?

Unless money is no object for you, you need health insurance. Yet, is health insurance like Medicare enough? You may be surprised to know that even if you have Medicare, you can still get caught out with many additional costs that can potentially ruin your retirement.

A word the wise: Don’t get caught short with your insurance. Know what the gaps are and make sure you’ve got them covered. This article will explain what supplemental insurance is and why you will benefit from it.

What Medicare Is

Medicare is the federal health insurance program for people who are over 65 or have a specific disability. By its very nature, it cannot cover everyone and everything. If it did, the government would not be able to afford it or the premium would be so high it would be self-defeating.

Health insurance premiums are based on probabilities and historical data. That means it will cover lots of basic and beneficial things for people including basic outpatient consultations, accessing a doctor and nursing care as well as inpatient surgery to a degree.

However, the more your healthcare needs shift away from the average data upon which it is built the more expensive additional costs will become.

What Medicare is Not

Standard Medicare includes a deductible which is a set fee you need to pay depending on what aspect of healthcare you are accessing. This in itself can be expensive.

For example, a 60 day stay in the hospital will cost around $1300. Plus, you are responsible for paying 20% of the costs associated with lots of other services such as blood tests, x-rays, and even cancer treatments like chemotherapy.

There is no cap on your 20%. Depending on what care you have, this can get real expensive real quick. The average cost of a hospital stay in the U.S is $16,000. Even if you only pay 20%, that is still over $3000. It comes as no surprise that the biggest cause of bankruptcy in the U.S is related to healthcare.

Furthermore, Medicare will not cover anything that turns out to be long-term. Even your hospital stay cover will run out after 60 days. Below are some of the additional areas that Medicare will not cover:

Eye Care (vision)

Hearing (hearing aids)

Dental

Additional Nursing (private care)

Prescription Drugs

Long-term care in a Nursing Home

What is Supplemental Insurance?

The first important thing to understand is that Medicare supplemental insurance is provided by insurance companies independent of the federal government. Yet, they are approved by the government. This also means the cover available and the rules around this cover may vary from state to state.

Supplemental insurance can be referred to as Medigap. The intention is that this type of insurance will help to cover the gaps in your standard Medicare cover. For example, it can cover your additional costs, deductibles and 20% contribution as well as extend your stay in the hospital fully covered beyond 60 days. Additional benefits can include putting a cap on your out of pocket payments.

Why You Need It

At this point in the discussion, the above is no longer a question but a statement. By far the majority of people would benefit from supplemental insurance. This is especially true if you cannot afford much in the way of out of pocket payments.

Further, if you have any healthcare problems that right now may not be that serious but in the long term could lead to serious health issues or disease it may be worth thinking very carefully about supplemental insurance.

Medicare supplements are not all the same. They are tailored according to different healthcare needs and risks. For example, you may suffer from high blood pressure or another condition. You need to investigate the best Medicare supplement to match your needs.

It is prudent to get supplemental insurance for your Medicare plan. You do not know what the future holds but you do know what your finances can withstand. How you get that supplemental insurance is also quite important.

Medicare Supplemental Insurance – Final Diagnosis

You can apply for your insurance on the first day of the month you become 60. It makes sense to access this additional coverage as soon as you can. If you do not then there are other opportunities but you increase the risk of limiting what you are entitled to. Timing is everything.

Some supplemental insurance plans have application windows only once per year. This is to help stop people from waiting to get sick and then applying. Of course, if you get sick and are not yet covered you can lose a lot of money in the interim period.

Watch out for application windows that do not require health questionnaires. These have obvious advantages. Obviously, no one plans to get sick but it does happen. Far better to plane to be healthy.